Cadiz starts to ride the boom

Saturday

May 5, 2012 at 12:01 AMMay 7, 2012 at 4:14 PM

Since 2002, Tammy Mattern has collected nine houses on the cheap through foreclosures and sheriff's sales in Cadiz, the beleaguered seat of rural Harrison County in eastern Ohio. Her latest find is an old boarding house with six bedrooms and three kitchens. It cost $15,000.

Ray Paprocki, The Columbus Dispatch

Since 2002, Tammy Mattern has collected nine houses on the cheap through foreclosures and sheriff’s sales in Cadiz, the beleaguered seat of rural Harrison County in eastern Ohio. Her latest find is an old boarding house with six bedrooms and three kitchens. It cost $15,000.

After an extensive renovation, she plans to offer it as a rental, just like her other properties. But she will market this site to a specific target audience: the expected influx of folks involved in extracting the oil and natural gas buried in the ground of this scenic but largely overlooked part of the state about 120 miles from Columbus.

Mattern’s hopes are tied to the success of a technology that most people here hadn’t heard of until about two years ago. Now, though, it could be the key to a prosperity not seen since King Coal dominated this job-starved county more than 30 years ago.

The buzz on the streets of Cadiz, which are lined with a few empty storefronts, is fracking. The talk isn’t necessarily about the controversy surrounding the use of massive amounts of a solution of water and sand mixed with chemicals to access oil and natural gas in Utica and Marcellus shale.

It’s not that there aren’t concerns about the possible environmental effects; it’s that people, at least longtime residents, are accustomed to industrial activity, said Bob Henderson, 55, a lifelong resident who is a superintendent at Hopedale Mining. “We are somewhat used to truck traffic and roads being compromised,” he said. “We had strip mining. We’ve seen the destruction of the land.?.?.?. When I was a kid, sometimes the streams were orange like Tang.”

And there doesn’t appear to be the get-rich-quick hysteria you might expect to find in a county where, to paraphrase a Citizen Cope lyric, hard times aren’t hard to find. Like an unrequited lover, this town has had its hopes dashed before.

The attitude could be described as measured optimism, at least among longtime residents. Still, there’s plenty of talk about the economic bounty fracking may bring, especially since Harrison County is home to by far the most productive Utica shale site in Ohio. The Buell well, operated by the nation’s second-largest natural-gas company, Chesapeake Energy of Oklahoma, pumped out 1.5 billion cubic feet of natural gas in 198 days in 2011, according to recent figures released by the Ohio Department of Natural Resources.

That distinction may not match Cadiz’s most notable brush with fame (being the boyhood home of Clark Gable), but it could prove to be much more profitable.

Some of the talk is about the out-of-state license plates spotted in town and the researchers clogging the Harrison County recorder’s office, poring over land records. Some of it is about the rumors of a new motel getting built or the population more than doubling from its current count of about 15,800.

And there’s no shortage of speculation about which family got how much money in the leasing deals signed with the energy companies, which have been sending letters and brokers to property owners throughout the county. It doesn’t go unnoticed when someone starts driving a new pickup around town.

Those agreements are getting sweeter. A few years ago, the going rate was $100 or less an acre plus a royalty on any oil or gas production. Last fall, the deal was $2,500 an acre and an 18 percent royalty. Now, it’s nearly $6,000 and 20 percent.

These aren’t just farmers or others with large holdings in the hilly countryside. Property owners throughout Cadiz have received offers, even if they have only a small plot on a residential street.

A problem, however, is that there aren’t a lot of places in Cadiz for people to spend that new cash — whether a few thousand or, if the stories are true, more than a million. Like many small Ohio towns, this village of more than 3,000 people lost most of its retail base many years ago. Residents, though, do have the choice of two Dollar General stores.

The village and the county have cashed in, too, by leasing or selling acres of publicly owned land, or even access to its water supply. For instance, Cadiz sold 207 acres for about $1 million to MarkWest Energy Partners of Denver to build a natural-gas processing plant. (MarkWest also is taking over downtown space for an office.) This unexpected revenue stream may help the village fund much-needed infrastructure improvements, said Mayor Ken Zitko. “We will have to discuss how to use this money wisely,” he added.

Some folks try not to regret that they signed too early, such as Tammy Mattern’s husband, Nip Mattern, who owns Mattern Tire. “I jumped the gun when it was $2,000 an acre,” he said. “I should have held out.”

Then there are the stories of landowners who got nothing because the mineral rights belonged to another entity. For example, there’s the Jewett Sportsmen & Farmers Club, with 185 members using the 187 peaceful acres a few miles outside of Cadiz to fish on four ponds and hunt various forms of wildlife. “At night, all you can hear is the howling of a coyote,” said club President John Harris.

The club was approached last year with an offer from an oil and gas company for $1,800 an acre, with plans to use the $336,000 windfall to improve its clubhouse, among other things. But then at the last moment it was discovered the mineral rights belonged to North American Coal Company, which then did a deal with Ohio Buckeye Energy, a subsidiary of Chesapeake.

In preparation for drilling, Chesapeake created a pad of large stones covering 10 to 12 acres on a prime part of the property, the club’s attorney said. Harris said the noise from the construction resulted in a low haul during the most recent deer-hunting season. “We had two,” he said. “Normally we get 20 to 25.”

The club filed a lawsuit to seek an injunction that would essentially stop the drilling, which a Harrison County judge approved earlier this year. There is a motion pending asking the court to reconsider the decision. “I used to go to the club and people asked about the fishing,” Harris said. “Now, it’s ‘What’s happening with Chesapeake?’?”

It’s the same kind of question that Mike Sliva, the president of the Cadiz Community Improvement Corp., gets around town.

“The estimates go from one extreme to another,” said Sliva, also the manager of the PNC branch office. “The numbers change on a daily basis.” On this particular day, the numbers he ticked off included as many as 200 wells in the county, with drilling lasting from seven to 15 years. (There are permits for 11 sites in Harrison, according to the ODNR.) Pipelines will be constructed, as well as maybe other processing plants. They would require 200 to 1,000 workers, depending on the number of projects. Then there will be drivers needed for those trucks hauling the sand, water and gravel to the drilling sites.

“Anybody with a CDL (commercial driver’s license) is guaranteed a job,” said Zitko.

At least one existing business is benefiting already: the limestone quarry Standing Stone in Cadiz. Its product is in demand to lay the pads and roads needed for the drilling sites. Business is projected to double this year over 2011, said manager John Leonard, who has hired 25 to 30 new workers and expanded his hours.

Based on information from Pennsylvania communities that have lived through the fracking boom, Zitko said the biggest changes to anticipate involve housing, traffic, crime and services. Those workers will need places to stay, eat, clean their clothes and drink a beer or five (hence, the increase in crime, such as DUIs, and the possibility of adding more jail cells, said Zitko). And more heavy trucks will clog and chew up the county roads.

That inconvenience would be a sign of good times again. The first source of wealth in Harrison County, founded in 1813, was agriculture, in particular the production of wool. Then came the first oil boom, in the late 19th and early 20th centuries. There is a photo of rows of derricks on barren land in a Harrison County Historical Society brochure with the caption: “It looked like hell with the lid off.”

Beginning in World War I, the region became heavily dependent on the rich and plentiful supplies of coal, providing high-paying blue collar jobs and making millionaires out of the company owners.

But environmental restrictions decimated the eastern Ohio coal industry by the 1980s. Jobs dried up, young people moved away, businesses closed and schools suffered.

“Cadiz lost its middle class,” said Jon Kirkland, a lifelong resident and the funeral director at Clark-Kirkland Funeral Home.

Over the years, residents tried unsuccessfully to bounce back by promoting its recreational lakes and Clark Gable museum to generate tourist dollars. They also got unfulfilled promises for new businesses, such as an ethanol plant, a pasta-making factory and a plan to build, of all things, a Buddhist temple and a golf course.

Now comes fracking. Sliva said he thinks that in five years Cadiz will resemble the bustling village of the 1970s.

Yet the excitement is tempered. Will the environment, especially the water supply, be harmed? Will enough jobs go to locals?

“We are skeptical, but hopeful,” said Nip Mattern.

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